How I Saved $33,212 by Teaching 4.5 Months

Happy Summer Greetings to my billions of Millionaire Educator readers out there! Most of you are unaware that in mid-January of this year, I took a job teaching Spanish at a high school in a neighboring county. Naturally, I had to weigh the pros and cons of the opportunity before I could commit 4.5 months of my life to the job. The job had some deal-breaking aspects: the school was a “bad” school located 55 minutes / 48 miles from my house, and to make matters worse the school day began at 7:15 for teachers. In order to cut down on my commuting, I talked to my brother-in-law about crashing at his house once or twice a week, and he said “Sure.” While having a place to stay would greatly reduce my commuting time, it also meant that some nights I would not be home with my beautiful wife and awesome son. Nevertheless, I bit the bullet and took the job knowing that I could make it worthwhile.

All the cons aside, the teaching assignment had many positives: small classes, a block schedule, and extra compensation due to an extended teaching day. Since most students in Georgia take Spanish to fulfill university entrance requirements, most of my students were motivated and wanted to do well (or at least well enough).

My financial goal was to use the job to fully fund as many retirement accounts as possible. Here is the final tally:

2013 Contributions

457

$15,512

403b

$11,200

IRA

$6,500

Total

$33,212

So, by putting my head down and teaching for 4.5 months, I managed to save over $33,000. How did I do this? Easy…hard core savings. There is nothing sexy or glamorous about it. Here is how you do it:

You call the insurance company’s sales rep to set up a meeting to open 403b and 457 accounts.

You explain that you do not want any of your salary to hit your bank account because you want to save it all. Get ready for a puzzled look as the sales rep (also know as a “financial advisor”) tries to comprehend what the Hell you are doing because nobody saves 100% of their salary.

Where do I put my money? All of my 403b and 457 contributions are sent to a “short-term fixed” account that pays about 2%. Sure, I’m losing to inflation, but my retirement accounts are too fee-bloated to do any real investing. My IRA contributions are sent to the Vanguard LifeStrategy Growth Fund. In September, I plan on moving all of my 403b balance to this Vanguard IRA.

Next, you probably will have to go by and talk to the people at payroll to let them know that you are not crazy and that you do want to divert your entire paycheck to your 403b and 457 accounts.

Be sure to thank the people at payroll for helping you max out your retirement accounts. I say this because I often sense that the people in payroll are hesitant to write paychecks that net $0.00.

As you can see from my June paycheck, some of the salary from my previous paychecks made it to my checking account. Instead of freaking out, I simply deposited $6,500 into our Vanguard IRA accounts. Violà, taxes deferred!

June Paycheck

What do you think? Could you use this 100% savings technique to accomplish some of your financial goals? If 100% is too aggressive, how about a 75% or 50% rate?

Investing: The majority (90%+) of our money is invested at Vanguard. If you know of a better low-cost option, please let me know.Why Vanguard?

Net Worth Tracking: We use Personal Capital to track our various accounts. Personal Capital is an great way to aggregate all of your financial accounts at one easy-to-use website.

Banking: We have used USAA for our checking and savings accounts since 1997. We also have checking and savings accounts at three credit unions: Alliant, Elements Financial, and Navy Federal. Finally, we have an online checking account with Simple.

Phone Options: My wife loves her $10 a month plan at Republic Wireless. I had the same plan and liked it too, but unfortunately I broke my phone in Mexico. I currently use a WiFi-enabled phone at a cost of $0 a month thanks to three Google apps: Voice, Hangouts, and Hangouts Dialer. We also have a Skype subscription with its own number for unlimited U.S. calls ($80 a year).

Travel Hacking: If you'd like to learn how to get "free" flights and hotel rooms, take the free course at Travel Miles 101. When we slow travel, we use Airbnb to find low-cost, month-long rentals. Whenever possible, we try to use Uber instead of taxis.

Bubba, From what I’ve seen, most teachers don’t even have financial goals other than to work 30 years to receive their teacher’s pension. Some save 5-15% of their earnings which is better than nothing. The problem they face is that their savings and investments get eaten alive over time by high-fee annuity products. I have decided that it is advantageous for my wife and I to strategically quit so that we can move our money to more cost-effective investments at Vanguard. Thanks for reading.

Is it aggressive to save 100% of your salary, lower your taxes, and possibly retire early? YES! But doable if you are focused. I am going to start off by funding my IRA and then as much of my 401K as possible by the end of the year.

I found you via your guest spot on the His and Her Money podcast. I have read every post and I am motivated to put some of your ideas into action. I have pulled out my 2014 taxes and started (albeit late) on planning on a reduction of my 2015 taxes. I will fund my IRA fully (something I knew about but wasn’t motivated to do) this year – first time ever!

I must admit I am a bit afraid to put 100% of my paycheck in my 401K…I won’t be able to fully fund it as it is too late in the year but I will do what I can. Luckily, I have ample savings so I will be able to eat and have somewhere to sleep. LOL.

ElleX, welcome to my website. I love the fact that you’re planning for the future with an eye on maximizing your savings. The results of a few years of hardcore savings are life-changing. If you live below your means while saving most of your paycheck, you have a good chance of becoming financially independent. If you can’t dominate your 401k this year, be ready to do it in 2016. Good luck working your plan. Ed

HAPPY NEW YEAR!!!! I wanted to give you an update on my savings. I was able to save almost $15k in my 401k for 2015 (from $960 on 9/14/15). I have already set up my contribution percentage to max out next year.

I haven’t contributed to my IRA yet…I do have until April. I am still contemplating where to put the funds – TIAA-CREF, Vanguard, or the Allianz IRA annuity that I already have – any suggestions or pick?

You know this wasn’t as hard as I thought it would be. Seeing the balances increase in my 401k made not seeing a figure on my paychecks tolerable!!! Lol.

Oh, for Christmas I got a special treat!!! Because of how the pay days fell this year…the last paycheck of the year had no benefits deducted (all 26 benefit payments were paid). Even more funds for my 401k!!!!!!!!!!!

ElleX, Nicely done! As for the IRA, I know where I’d invest: Vanguard. Tiaa-Cref is also a good choice due to its lower costs. I never like the idea of coupling an IRA with an annuity due to the fees involved. Email me if for more insights if necessary. Happy New Year and keep on hammering. Ed